Binance Lawsuit: Epic Battle Unfolds as Binance Blames SBF for FTX Collapse

Get ready for a deep dive into the ongoing legal drama shaking the crypto world. A significant **Binance lawsuit** is making headlines, as the exchange takes strong action against the hefty claim brought by the FTX estate. This isn’t just another court filing; it’s a direct challenge that places the blame for the **FTX collapse** squarely on internal issues, rather than external market forces or competitors.

The $1.76 Billion **FTX Lawsuit**: What’s the Core Claim?

The legal team representing the defunct FTX exchange initiated a massive $1.76 billion **FTX lawsuit** against Binance. Their central argument? That Binance, and specifically its former CEO Changpeng Zhao (CZ), contributed significantly to FTX’s downfall through market manipulation and other hostile actions. A key part of the claim revolves around a 2021 deal where Binance sold its equity stake back to FTX. The lawsuit alleges this buyback was improperly funded using FTX customer assets, a serious accusation.

However, Binance is fighting back hard, filing a motion to dismiss the suit in the Delaware Bankruptcy Court on May 16. They label the **FTX lawsuit** as ‘legally deficient’ and an attempt by the FTX estate to deflect responsibility from the real cause of the failure.

Binance’s Defense: Blaming **SBF** and Internal Fraud

Binance’s primary defense is straightforward: the **FTX collapse** was a result of ‘one of the most massive corporate frauds in history,’ orchestrated by its own leadership, primarily **SBF** (Sam Bankman-Fried). Binance points directly to **SBF**’s criminal conviction on seven counts of fraud and conspiracy as proof that the internal misconduct was the root cause, not anything Binance did.

Regarding the 2021 buyback, Binance argues that FTX continued operating successfully for 16 months after the transaction. They claim there’s no credible evidence suggesting FTX was insolvent at the time of the share repurchase. This directly challenges the lawsuit’s narrative that the buyback immediately crippled FTX using customer funds.

Did a Tweet Trigger the **FTX Collapse**?

Another major point in the **FTX lawsuit** involves a tweet from CZ on November 6, 2022. In it, CZ announced Binance’s plan to liquidate its holdings of FTT, FTX’s native token. The lawsuit claims this tweet triggered a panic sell-off, leading directly to FTX’s liquidity crisis and subsequent collapse.

Binance counters this, stating CZ’s tweet wasn’t a malicious act but a response to publicly available information. Specifically, they cite the CoinDesk article from November 2, 2022, which exposed the intertwined balance sheets of Alameda Research (FTX’s sister company) and FTX, highlighting significant risks. Binance maintains their decision to liquidate FTT was based on these ‘recent revelations.’ They also defend CZ’s comment about minimizing market impact, stating the lawsuit provides no facts to prove Binance intended otherwise.

Jurisdiction and ‘Pure Conjecture’

Beyond the substance of the claims, Binance is also challenging the court’s authority over certain entities named in the suit. They argue that none of the foreign entities involved are based or incorporated in the United States, placing them outside the Delaware court’s jurisdiction.

Binance’s filing doesn’t hold back, criticizing the plaintiff’s case as a ‘grab bag of state law claims’ built on ‘pure conjecture.’ They suggest much of the lawsuit’s narrative comes from the ‘hindsight speculation’ of a ‘convicted fraudster’ – a clear reference to **SBF**.

What Happens Next in This **Crypto Exchange Lawsuit**?

Binance has formally requested the court dismiss all claims against them with prejudice, meaning the lawsuit could not be refiled later. As of the report, the FTX estate had not yet filed its official response to Binance’s motion to dismiss.

This legal battle is a critical development in the ongoing fallout from the **FTX collapse**. It highlights the deep animosity and competing narratives surrounding one of the biggest failures in crypto history. The outcome could have significant implications for how future disputes between major crypto players are handled.

Meanwhile: FTX Creditors See Progress

In related news, the FTX estate is moving forward with repaying creditors. A second round of repayments totaling over $5 billion is scheduled to begin on May 30. This aims to distribute funds to a group of creditors who are expected to recover a significant percentage of their claims, potentially ranging from 54% to 120% depending on their category. The total potential repayment amount could reach $16 billion, depending on the final number of valid claims.

Summary

Binance is vigorously defending itself against the $1.76 billion **FTX lawsuit**, arguing that the **FTX collapse** was caused by internal fraud led by **SBF**, not actions by Binance or CZ. They challenge the lawsuit’s claims regarding the 2021 buyback and the impact of CZ’s FTT tweet, presenting their actions as reasonable responses to known information. Binance is seeking full dismissal, calling the suit speculative and legally weak. This major **crypto exchange lawsuit** continues to unfold, representing a key chapter in the post-FTX era, even as the FTX estate proceeds with its complex creditor repayment process.